daveh's HYPish Income portfolio 2022 update

[daveh]

This is an update of my HYPish Income Portfolio. Earlier updates were on the TMF boards (but may well have been lost with the board closures, there were links in 2016’s update). My updates on LF for 2016-2021 can be found here:

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Executive Summary

Performance in income terms was good again this year. After last year’s 50% increase in cash terms there was a further 19% increase this year.

Capital performance has been rather up and down, with it over 9.5% down on last year in September, nearly 4% up earlier in the year and ending the year just a little down at -2.5%

Looking at the unitised performance: in 2021 accumulation units reached their highest value since I started unitising the portfolio in 2003 at £4.13 per unit and income units were close to their maximum value at £1.73 per unit (income units were at their maximum value of £1.79 in May 2018) This year both accumulation and income units slipped back to £4.03 and £1.60 respectively A fall of -2.5% for accumulation units and a fall of -7.3% for income units. Overall the portfolio performance calculated by XIRR was a fall of -2.6% for the year.

Details and Commentary

Portfolio Constituents from HYPTUSS

                                                                                 Value     Div    Fcst 
Share                           Epic    Sector                                  %Total  %Total   Yield
BP                              BP      Oil & Gas Producers                      4.21%   3.05%   4.30%
Aviva                           AV      Life Insurance                           2.80%   3.35%   7.10%
AstraZeneca                     AZN     Pharmaceuticals & Biotechnology          4.77%   2.01%   2.50%
BT Group                        BT-A    Fixed Line Telecommunications            1.28%   1.40%   6.50%
InterContinental Hotels Group   IHG     Travel & Leisure                         0.42%   0.16%   2.20%
GlaxoSmithKline                 GSK     Pharmaceuticals & Biotechnology          2.07%   0.73%   2.10%
Marks and Spencer Group         MKS     General Retailers                        0.43%   0.23%   3.20%
Lloyds Banking Group            LLOY    Banks                                    2.03%   1.91%   5.60%
Mitchells and Butlers           MAB     Travel & Leisure                         0.03%   0.00%   0.00%
Prudential                      PRU     Life Insurance                           1.61%   0.41%   1.50%
Persimmon                       PSN     Household Goods & Home Construction      1.83%   4.81%  15.60%
SEGRO                           SGRO    Industrial & Office REITs                4.10%   2.21%   3.20%
Smith (DS)                      SMDS    General Industrials                      2.66%   2.42%   5.40%
SSE                             SSE     Electricity                              4.27%   4.18%   5.80%
Vodafone Group                  VOD     Mobile Telecommunications                1.59%   2.06%   7.70%
United Utilities Group          UU      "Gas, Water & Multiutilities"            1.88%   1.42%   4.50%
British Land Company            BLND    Retail REITs                             1.09%   0.98%   5.30%
Pennon Group                    PNN     "Gas, Water & Multiutilities"            1.86%   1.41%   4.50%
Tesco                           TSCO    Food & Drug Retailers                    1.12%   0.87%   4.60%
Sainsbury (J)                   SBRY    Food & Drug Retailers                    1.00%   0.96%   5.70%
South32 Limited (DI)            S32     Mining.                                  2.12%   5.22%  14.60%
Legal and General Group         LGEN    Life Insurance                           3.49%   4.58%   7.80%
BAE Systems                     BA      Aerospace & Defence                      4.58%   2.85%   3.70%
Galliford Try                   GFRD    Construction & Materials                 0.40%   0.33%   4.90%
Petrofac Ltd.                   PFC     "Oil Equipment, Services & Distribution  0.34%   0.00%   0.00%
BHP Group                       BHP     Mining.                                  3.86%  12.48%  19.20%
Vanguard FTSE All-World UCITS   VWRL    Equity Investment Instruments            4.88%   0.85%   1.03%
M and G                         MNG     Financial Services                       2.27%   3.71%   9.70%
Henderson Far East Income Ltd.  HFEL    IT - Asia Pacific Income                 2.50%   3.79%   9.00%
The Renewables Infrastructure   TRIG    IT - Renewable Energy Infrastructure     3.27%   2.70%   4.90%
Vistry Group                    VTY     Household Goods & Home Construction      1.51%   2.72%  10.70%
NatWest Group                   NWG     Banks                                    1.36%   0.94%   4.08%
Middlefield Canadian Income PC  MCT     IT - North America                       2.67%   1.93%   4.30%
Unilever                        ULVR    Food Producers                           3.15%   1.96%   3.69%
Currys Plc                      CURY    General Retailers                        0.31%   0.25%   4.77%
Shell                           SHEL    Oil & Gas Producers                      3.72%   2.29%   3.65%
LLoyds Banking Group 9.25% Non  LLPC    Banks                                    1.97%   2.30%   6.90%
IShares Asia Pacific Dividend   IAPD    Equity Investment Instruments            2.63%   2.75%   6.20%
IShares EuropeDividend Ucits E  IDVY    Equity Investment Instruments            2.79%   2.61%   5.56%
S&P Emerging Markets Dividend   EMDV    Equity Investment Instruments            3.19%   2.14%   3.98%
Gore Street Energy Storage Fun  GSF     IT - Renewable Energy Infrastructure     2.88%   2.77%   5.70%
Aviva 8.375% Pref               AV-B    Corporate Bonds                          2.09%   2.41%   6.86%
Woodside                        WDS     Oil & Gas Producers                      1.99%   2.95%   8.80%
Haleon                          HLN     Pharmaceuticals & Biotechnology          0.97%   0.89%   5.50%

Portfolio Running Yield = 5.93%

                                                  Value      Div
Sector                                           %Total   %Total
Oil & Gas Producers                               9.92%    8.29%
Life Insurance                                    7.90%    8.34%
Pharmaceuticals & Biotechnology                   6.84%    2.74%
Fixed Line Telecommunications                     1.28%    1.40%
Travel & Leisure                                  0.45%    0.16%
General Retailers                                 0.74%    0.48%
Banks                                             5.36%    5.15%
Household Goods & Home Construction               3.34%    7.53%
Industrial & Office REITs                         4.10%    2.21%
General Industrials                               2.66%    2.42%
Electricity                                       4.27%    4.18%
Mobile Telecommunications                         1.59%    2.06%
"Gas, Water & Multiutilities"                     3.74%    2.83%
Retail REITs                                      1.09%    0.98%
Food & Drug Retailers                             2.12%    1.83%
Mining.                                           5.98%   17.70%
Aerospace & Defence                               4.58%    2.85%
Construction & Materials                          0.40%    0.33%
"Oil Equipment, Services & Distribution           0.34%    0.00%
Equity Investment Instruments                    13.49%    8.35%
Financial Services                                2.27%    3.71%
IT - Asia Pacific Income                          2.50%    3.79%
IT - Renewable Energy Infrastructure              6.15%    5.47%
IT - North America                                2.67%    1.93%
Food Producers                                    3.15%    1.96%
Corporate Bonds                                   2.09%    2.41%
Pharmaceuticals & Biotechnology                   0.97%    0.89%
Total                                           100.00%  100.00%

Note: 1...'Value %Total' is the portfolio value of the share as a % of the total portfolio
      2...'Div %Total' is the expected dividend of the share based on forecast yield
                       as a % of the total portfolio expected dividend

This year, my trading was at my usual low levels. I added very little new money (~2.5% of the portfolio value) in addition to reinvesting the dividends.

There was a large special dividend from Aviva and a smaller special from Natwest (neither was counted as income in line with the new policy of treating specials with share consolidations as capital returns), The Aviva special was split between being invested back into more Aviva shares and into a new holding of GSF

Top ups were made in GSK, NWG, AV., VTY, LLOY, AV.B, VOD, WDS*, HLN* most of which were near the top of my HPTUSS when bought.
* new shares received when split out from an existing share (BHP and GSK respectively, WDS was topped up as it was at the top of HYPTUSS, HLN was topped up to bring it up to a decent size for a possible sale later depending on what happens with future dividends.

There was one new purchase (GSF) bought for its good dividend, its positioning in green energy (mostly storage) and as a compliment to TRIG.
I have also started a little extra trading to move some holdings into ISAs due to the reduction in the dividend tax allowance and capital gains tax allowance and possible increases in CGT.

Performance
The portfolio was unitised from September 2003 and the details are shown below.

Capital Performance (dividends reinvested) Accumulation units and Income units




Income Performance




My portfolio contains VWRL, EMDV, IDVY and IAPD all exchange traded funds and HFEL and MCT which are Investment Trusts. These have been included to add extra diversification to high yielding companies in Emerging and non-UK Markets that I do not feel able to achieve by buying individual shares myself. I’ve also added TRIG and GSF high yielding infrastructure funds investing in renewable energy assets, I’ve also wanted to invest more in the USA and in this case have included VWRL, which though an all-world ETF is >50% invested in the USA and MCT. Though VWRL is not particularly high yield, neither was the high yield equivalent (VHYL) or ETFs investing in US dividend shares (eg QDIV only yielded 2.5% similar to VWRLs yield at the time) so I went for the extra diversity and better total return of VWRL. I will have another look at VHYL as its yield is improving, and it may be a good time to buy. I’ve also been thinking of adding bonds/debt via bond/debt ITs and have been looking at NYCF, BIPS, SMIF and HDIV in that order of interest.

During the covid year the portfolio yield dropped to 3.5% compared to 4.8% in 2019. Last year the portfolio yield was back to 4.3% and this year it has climbed further to 5.0%. I should look at recycling some of the no/low yielding shares into shares with higher yields (eg PFC and MKS, MAB is worth keeping for the 20% off you get as a shareholder).

[Arborbridge]

Dave,

Very nice report and portfolio - looks as though you are well set up whatever happens barring armageddon.

AAMOI, where did you find the yields of WDS and HLN? I'm using much lower yields, 5.4% and 2.44% respectively, based on rather hearsay evidence of the dividends! Hopefully, we will soon have greater visibility.

Arb.

[daveh]

Dave,

Very nice report and portfolio - looks as though you are well set up whatever happens barring armageddon.

AAMOI, where did you find the yields of WDS and HLN? I'm using much lower yields, 5.4% and 2.44% respectively, based on rather hearsay evidence of the dividends! Hopefully, we will soon have greater visibility.

Arb.

I guessed at them. HLN was from what was said (by GSK) about how much they might pay once split off, and WDS was from a guesstimate of what they might pay next year based on the one dividend received so far. I should review both of these (thanks for pointing it out), but HYPTUSS has been firing out dodgy forecast yields recently so I haven't updated the yield calculations recently just left it with the values from a while ago. I should lower the HLN yield as they have now made more pronouncements about the yield themselves and re-visit WDS as I may be over estimating its yield. I'd also take the yields quoted for the two house builders (VTY and PSN) with a big pinch of salt as I expect these will fall. I was hoping to see lowered estimates from HYPTUSS as that would have suggested new input from analysts forecasts, but they don't seem to have moved much ( though perhaps the drop in forecast dividend has matched the drop in share price!).

I'm using an old version of HYPTUSS (11.77) but it links to my own spreadsheets for the share prices, so if I go to a later version I'd have to update manually a load of links. I should bite the bullet and try the latest version and see if that gives better forecast yields.

[seagles]

I'm using an old version of HYPTUSS (11.77) but it links to my own spreadsheets for the share prices, so if I go to a later version I'd have to update manually a load of links. I should bite the bullet and try the latest version and see if that gives better forecast yields.

The latest version is no better, I believe kiloran is working on an alternative source.

[Arborbridge]

I'm using an old version of HYPTUSS (11.77) but it links to my own spreadsheets for the share prices, so if I go to a later version I'd have to update manually a load of links. I should bite the bullet and try the latest version and see if that gives better forecast yields.

I don't think it will give better yields. Sharecast has been quite flaky lately and there are about 6 or 8 yields I'm having to put in manually. I regard my forecast for income as being very approximate this year, but better than nothing.

As for HLN and WDS, I just hitched a ride with what TJH mentioned ages ago, until some other information arrives. That's a dividend of 8p for HLN and 108p for WDS. I've no idea if that will be correct, but it's a starting point. It's not something which bothers me as the holdings are small and time will clarify everything.


Arb.

[daveh]

I'm using an old version of HYPTUSS (11.77) but it links to my own spreadsheets for the share prices, so if I go to a later version I'd have to update manually a load of links. I should bite the bullet and try the latest version and see if that gives better forecast yields.

I don't think it will give better yields. Sharecast has been quite flaky lately and there are about 6 or 8 yields I'm having to put in manually. I regard my forecast for income as being very approximate this year, but better than nothing.

As for HLN and WDS, I just hitched a ride with what TJH mentioned ages ago, until some other information arrives. That's a dividend of 8p for HLN and 108p for WDS. I've no idea if that will be correct, but it's a starting point. It's not something which bothers me as the holdings are small and time will clarify everything.


Arb.

For WDS I was going with a full year dividend of ~150p My working was that the last dividends was a final of 94p, so assuming a 2/3 : 1/3 split between final and interim that would be ~94p + ~47p plus a little year on year increase to give about 150p. I was then using a price in the 1800s as it was at the time to get the yield in the 8% range. Price has now gone up so I should probably reduce the yield to 141/1923 = 7.3% to be on the conservative side.

[Arborbridge]

For WDS I was going with a full year dividend of ~150p My working was that the last dividends was a final of 94p, so assuming a 2/3 : 1/3 split between final and interim that would be ~94p + ~47p plus a little year on year increase to give about 150p. I was then using a price in the 1800s as it was at the time to get the yield in the 8% range. Price has now gone up so I should probably reduce the yield to 141/1923 = 7.3% to be on the conservative side.

I could be pleasantly surprised then. Actually, WDS is more or less ripe to receive more cash - if the yield were 6% is would certainly be, topped only by Sainsbury.


Arb.